Building A Factory From Scratch In Thailand And The Concept Of Waterfall Engineering

I’ve been travelling in and out of Bangkok the past few days visiting factories with CJ, my business partner, making preparations for some new pharmaceutical products we intend to launch early next year. Everyone involved with the company now are either pharmacists, doctors, or in pharma sales, except for me with no background in sciences, so the learning curve is steep and I often get left behind in conversation. I must have you know that I am unfazed by this since I absorb things like a fucking sponge and will be up to pace in due time.

One of the things we are contemplating, rather seriously, is creating our own manufacturing capacity, freeing us from the mercy of OEM manufacturers. That entails building a factory from scratch, which in itself is no simple task, but with the backing of some deep pocketed investors is a viable option worth exploring for us. However, due to the nature of our business, regulation and compliance work is strict and there is little room for shortcuts, meaning preparations must begin promptly. The FDA has little patience or flexibility, and has a mighty strong back-hand slap. A slight mishap and they will shut you down without reservation. Things need to be crystal clear and well communicated, else forget about it altogether.

The entire process of building a factory from beginning to end should take anywhere from 90-110 weeks, aka 2 years if all goes swimmingly. The process used is called the waterfall approach and always begins with engineering.

The first 40 or so weeks is strictly focused on engineering and design. This engineering is based solely on the requirements of what you will be producing, and the types of machinery are generally decided by a third party appraiser. Particularly in pharma, the kinds of machines that can be used are limited to those with granted approval, so don’t even bother trying to implement cool modern equipment you saw on the internets. You’ll just piss off the feds which will delay you even further. Once your tenders are awarded, which takes another few weeks, construction will commence.

Construction will take a minimum of another 40 weeks and after that is complete you can have your fancy machines and equipment delivered and installed. Then you present it as is to the inspectors and once it is commissioned and qualified, you’re OK to go. 2 years gone.

Now, there are many equipment suppliers with experience advising all kinds of factories that can help you, such as Rieckermann, but expect to pay a price for that convenience. If you want to build something simple like a small assembly line to make iphone cases and other gimmicks then you can probably get away without an adviser and complete it in less than 1/4 of the above time, assuming you do know what you’re doing in terms of engineering.

Perhaps the biggest decision you have to make early on is location. By the time your contractors finish putting together a plan based on your specifications, you should have this figured out. In Thailand, you have 2 options: Build it in an Industrial zone right next to those ham-and-eggers from Toyota, Samsung, Panasonic, Suzuki, etc? Or buy your own plot of land and build it there.

In some areas not too far out of Bangkok, procuring land is very affordable. In fact, you can probably purchase an egregiously sized lot of a couple Rai (1,600m2 – 5,000m2) for under $100k usd. This gives you the capacity to do whatever the fuck you want without having to be considerate to any neighbors, but also comes with the problem of having to build your own infrastructure (imagine a big wide open field, filled with weeds, in the middle of nowhere).

Setting up in an industrial zone, on the other hand, is more straightforward and comes with many perks, including tax advantages. There are 3 types of industrial areas; Green Field Zones, Industrial Parks, and Industrial Estates – which all offer assistance in setting up a factory. Industrial Estates and Industrial Parks are pretty much the same thing, with the main difference being that Estates are government owned and regulated. On the plus side, they help you set up acquiring permits, along with providing electric, utilities, water, storage, and all that good stuff. Green Field Zones are pretty much the piker’s version of the above, being similar but much shittier in many ways and have more restrictions.

Fortunately for me, I have extremely competent Thai partners that deal with the FDA on a regular basis and know the ins and outs of what needs to be done. Whenever they have meetings, I make it a point to attend alongside them. Despite not adding any value by my person being there, I learn an immense amount about the process and am slowly growing my knowledge bank. Generally, I retreat into the background, saying no more than needed but speaking just enough so that people don’t think I’m a fucking mute. Little by little, the opportunity before us is becoming clear to me – details of which I will outline in another post.

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A travelling entrepreneur documenting lessons and challenges learned on the journey. My time is split between Asia and North America, and am always on the lookout for opportunities. I offer a different perspective on business in Asia.